been less about bringing another
trading platform or novel trading
paradigm but actually broader
Fin Tech initiatives addressing
various parts of the transaction
lifecycle, data or market information. That’s where, more recently,
we’ve seen initiatives launch that
are looking at different parts of the
value chain, rather than just being
another trading platform.

HM: What differentiates JP Morgan’s platforms to its competitors?

NC: Obviously, we are substantial
organisation in terms of size and
scale and our breadth of activity in
the fixed income space, from core
macros rates to foreign exchange
to high yield, is a significant differentiator. Our global reach. From
Hong Kong, Tokyo to North America is another aspect. But also being
an active manager is somewhat
differentiating from our larger
competitors who are dominated by
passive products. As we discussed
before, we do have the scale and
size that we can invest in our own
proprietary systems and as the
economics of our business become
evermore challenging for us and
our competitors, having scale and
being able to invest in your own
technology will become an ever-in-creasing differentiator.

solution, then we will buy it, but if
the solution given our investment
process is a proprietary one then
we are now far more ready to build
that solution rather than buy. A
good example of that is our foreign
exchange trading and order management platform that we’ve built
out from scratch. The user interface

and the logic around execution is
something developed internally and
very much proprietary, and then we
use a vendor solution to deal with
some of the connectivity at the back
end. But that’s an area that in order
to get a solution that is optimised
towards our workflow, build is
much than buy.

HM: What are your thoughts on the
explosion of bond trading platforms
that have entered the market in
recent years?

NC: Inevitably with any kind of
explosion of new ideas, some of
those initiatives will wither on the
vine, because they don’t present a
strong enough, differentiating value proposition. To be better than
what’s already out there in terms
of the incumbents or the 120 other
initiatives, maybe 10% will thrive
because the ecosystem cannot support all of those competing products. It’s an explosion of life into
an ecosystem that is unsustainable.

More recently, the initiatives haveforeign exchange, futures and thevery top end of core liquid ratesmarkets - that’s about building effi-cient execution mechanisms. Boththe buy-side and sell-side has comea long way in terms of buildingthose platforms and protocols toaddress that challenge.

The other category is for less
liquid products, which is about
building a picture of liquidity and
understanding where I can source
bids or offers in the market. It’s
about understanding where that
liquidity resides and being able
to build that picture swiftly and
confidently. A number of initiatives
shows the industry is starting to
move into that space and I think
that’s where we will start to see
more of a transformation in terms
of how markets operate. On top of
that, the commercial pressures on
the sell-side, the number of human
brokers that are employed and
justifying having on a desk is clearly
changing. Even with a pick-up of
volatility, we don’t see that trend
reversing. So it’s also about using
data at the point of execution to
understand where liquidity lies, and
also feeding that back more fundamentally to the investment process.

HM: Which technology solutions
does JP Morgan have in place
already and which are you looking at
implementing in the future?

NC: Historically, we have been
biased towards vendor solutions
but what we have done over the
past few years is be a little more
judicious about whether we buy
something or build it ourselves.

If the best product out there for
the job or the function is a vendor

“The uncertainty of transaction costs, ratherthan having an absolute level of transactioncosts as being high or low, has beenchallenging at times.”